Pon v. Fremont Indemnity Co.

Opinion

KLEIN, P. J. Plaintiff and appellant Helen Liang Pon (Pon) appeals the judgment of dismissal entered after the trial court granted summary judgment in favor of defendant and respondent Fremont Indemnity Company (Fremont).

Because Pon’s settlement of an appeal taken from a judgment entered in the underlying action did not preclude a final judicial determination of Fremont’s insured’s liability, the trial court erroneously dismissed Pon’s insurance bad faith suit against Fremont pursuant to Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287 [250 Cal.Rptr. 116, 758 P.2d 58].

Factual and Procedural Background

In the lawsuit underlying this action, Pon sued Kok-Po Ng, Grand Pacific International Ltd. (collectively, Ng), and others for damages arising [31]out of a real estate transaction. Fremont insured Ng and provided a defense. After a trial, the jury returned a special verdict in favor of Pon and against Ng. The trial court entered judgment accordingly.

Ng appealed the judgment in favor of Pon and while that appeal remained pending, Ng and Pon entered into a “Settlement Agreement” and “General Release” pursuant to which Ng agreed to pay Pon $350,000. Pon executed a “Covenant Not to Sue or Execute” on that portion of the judgment which remained unsatisfied by reason of the difference between the judgment and the amount of the settlement.

On April 5, 1988, Ng filed a voluntary abandonment and dismissal of appeal and Pon filed a partial acknowledgement of satisfaction of judgment regarding the $350,000 received from Ng.

The “Settlement Agreement” provided in part: “This Agreement represents a compromise of disputed claims, and the parties’ agreement to the terms hereof shall in no manner be deemed to constitute an admission, express or implied, of liability by any party to any other person or entity, or of any fact, other than the facts set forth [herein] . . . , or an admission of the merits of the position taken by any party hereto with respect to these, or any other, disputes.”

On August 22, 1988, Pon filed the instant Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [153 Cal.Rptr. 842, 592 P.2d 329], action against Fremont, for bad faith and breach of Insurance Code section 790.03, subdivision (h), in its representation of Ng.1